NBC’s Zucker: Apple used us! (Shh, we used Apple too)

NBC chief Jeff Zucker made a number of requests of Apple before walking away …

NBC Universal chief Jeff Zucker has some sour grapes over Apple's continued success with iTunes and wants to make sure the whole world knows it. According to Zucker, Apple has "destroyed the music business" and must be stopped before it does the same to video. He revealed that the iPod maker rebuffed NBC's proposals to raise prices on some of its content, and downright refused to give the company a cut of Apple's iPod sales. All of those things combined led to a bitter NBC, which eventually decided to take its ball and go home.

Apple currently prices all TV shows consistently at $1.99 per episode—a price that many thought was outrageous for what you got when video made its debut on the iTunes Store, but has since proven to be wildly successful. That wasn't enough for Zucker, though; he explained that NBC "wanted to take one show, it didn't matter which one it was, and experiment and sell it for $2.99," according to Variety's recounting of the conversation held yesterday at Syracuse University's Newhouse School of Public Communications. "We made that offer for months and they said no."

Of course Apple said no. The company—or rather, Steve Jobs—has been known to be just as stubborn as the media companies when it comes to price negotiations, and Apple has repeatedly stuck to its guns in maintaining consistent pricing across its entire store. The only time Apple has broken its uniform pricing structure was when it first introduced iTunes Plus. The DRM-free tracks were not just free of copy protection, they were also encoded at a higher bit rate (256kbps) than regular iTunes tracks, and therefore advertised as a better value at $1.29 (compared to 99¢ for DRMed tracks). Apple has sincedropped the price on iTunes Plus songs to 99¢, however, making all of the music on the iTunes Store uniform once again.

Zucker's bitterness goes deeper than higher-priced videos, though. He revealed that NBC had also asked Apple for a cut of iPod sales—a request that no doubt sent Steve Jobs into a fit of maniacal laughter before sending a one-word reply back. "Apple sold millions of dollars worth of hardware off the back of our content, and made a lot of money," complained Zucker. "They did not want to share in what they were making off the hardware or allow us to adjust pricing."

Not coincidentally, Zucker's comments came on the same day that NBC's own video venture, Hulu, went live to a private beta. Launched in a partnership between NBC and News Corp. (which, among other things, owns Fox and MySpace), Hulu hopes to become a premier video broadcast and distribution medium on the web. Not only will viewers be able to watch full episodes of a number of popular TV shows and movies online for free, they will be able to embed whole videos and share them (or clips from them) with friends anywhere on the web, including on blogs and social networking profiles.

NBC naturally likes this setup, since it allows the companies to maintain strict control over what the users do with the content. The ad-supported videos are web-only (and will remain so for the foreseeable future, in order to prevent even the slightest temptation of piracy), and old episodes will expire eventually once new ones are added. Zucker clearly believes that the ad-based model will make NBC more money than iTunes ever did—he said that the iTunes structure only made the company "pennies," while the analog (ad-supported) world provided dollars.

Let's not forget that, contrary to what Zucker says today, NBC did benefit greatly from its partnership with iTunes. In December of 2005, Zucker was quite enthusiastic to get more of NBC's shows onto iTunes as a result of its initial success and part of the company's "overall digital strategy." Almost a year later, NBC credited Apple and iTunes for singlehandedly saving its hit show, The Office, from cancellation. If not for iTunes sales, The Office would have already been dead and six feet under, according to president of NBC Universal Television Studios Angela Bromstead.

If Apple is guilty for piggybacking on NBC's content, NBC is just as guilty for using iTunes to gain a foothold in the digital world and then walking away to make more ad dollars on its own. But as we wrote yesterday about Hulu, while the new service may be met with initial success, the numerous limitations will likely hurt it in the long-term. NBC can't keep its shows in a carefully-controlled sandbox forever, but Zucker would sure like to try.

Jacqui Cheng
Jacqui is an Editor at Large at Ars Technica, where she has spent the last eight years writing about Apple culture, gadgets, social networking, privacy, and more. Emailjacqui@arstechnica.com//Twitter@eJacqui